DA Davidson Initiates AMD at Neutral

DA Davidson analyst Gil Luria initiated coverage of AMD (NASDAQ: AMD) with a Neutral rating and a price target of $220.00.

“We initiate coverage of AMD with a NEUTRAL rating and $220 price target, based on what we view as a marginal AI accelerator player that is in the act of playing catch-up, despite their dominant position in the consumer and server CPU markets.

AMD’s Instinct GPUs benchmark great on paper, but the reality is that customers are not buying spec sheets.

AMD can point towards the MI300X, MI350X, and MI400X and say that on a single-node basis, the specs look respectable relative to competitor options.

However, running frontier workloads across tens of thousands of GPUs is an interconnect and systems-integration problem that NVIDIA has a hold on and AMD doesn’t have a serious answer for.

The result is that real-world model FLOPs utilization on AMD’s hardware at scale runs materially below what the spec sheet implies, which means the effective cost per useful FLOP is worse than advertised.

We’d argue the most telling sign is OpenAI, who is arguably the single most compute-hungry lab without a captive relationship to any hyperscaler’s proprietary silicon.

And yet, we’d ascertain that OpenAI likely ranks AMD behind not only NVIDIA, but its own Broadcom ASIC program, and potentially even Trainium and TPU if they had access.”

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